One ‘new’ piece of ad-targeting technology in particular has recently crept out of the US and into Europe, but it doesn’t yet seem to have captured the attention of the mainstream media. What we’re talking about is transaction-linked ads.

The story so far

Earlier this year, we reported on how Cardlytics has been helping banks harness spending-data to sell ad space to companies. Its technology has been widely used by major financial institutions in the US for a while already, with banks and retailers targeting customers in a very precise way based on their prior purchases. For example, if you use your card to buy a Big Mac from McDonald’s, a promotion for Burger King could feature under that item on your online bank statement.

Lloyds Banking Group, the Halifax’s parent company, announced it would deliver ads to UK customers under a promotion called ‘Halifax Cashback Extras’ with “dozens of retailers” on board, including Argos, O2, Morrisons, New Look, Pizza Express and Homebase.

Account holders can earn between 5 and 15 percent cashback if they choose to click on one of the new offers shown next to their online and mobile statement. The activation is tied to their account, which means there are no codes or physical vouchers to speak of, and the cashback is applied automatically. Moreover, the tracking technology doesn’t just draw on current and future transactions – it pulls on data covering more than one billion historic purchases.

Cardlytics: Coming to a bank near you

Last week, Lloyds Banking Group extended the initiative to the Lloyds Bank under the ‘Everyday Offers’ brand, effectively opening transaction-linked advertising to more than thirty million consumers around the country.

Cardlytics say that retailers are seeing “strong results” from the program so far, with transaction values of redeeming customers increasing by two-thirds on average.

“Cardlytics has been a great success for retailers in the US and the signs from our initial launch in the UK have been very strong,” says Charlie Humphreys, Cardlytics’ UK Managing Director. “Retailers have been enthused by the insight and precision targeting offered by the model, together with the simplicity of participation.”

The implications of this kind of advertising are huge, and it’s a wonder why there hasn’t been any outcry or deeper considerations given to what could prove to be controversial, especially given the recent media attention centered around personal data in the digital age.

In the US, targeted advertising enabled by the likes of Cardlytics is opt-out, which means customers must click a button in their online account to tell their bank they don’t want the offers. We’ve previously been told that the opt-out rate is only 1.5% and, given that Cardlytics has insight into consumer purchase behavior covering around 70% of US households, this gives some indication as to the extent of the valuable data it can monetize.

In the UK, Cardlytics-powered ads (or ‘rewards’ and ‘offers’, as the official lingo goes) is opt-in, with participation based on Halifax’s and Lloyds’ marketing permissions. Customers have to activate individual offers themselves, which they can do through their online account.

Cardlytics is remaining tight-lipped on its future plans for the UK and across Europe, but it’s safe to say you can expect transaction-linked ads to arrive in a bank near you in the not-too-distant future.

“We are actively looking at other markets in Europe and beyond,” says Humphreys. “We believe the Cardlytics model will work well in a number of markets and are excited about the next stage in our growth. At this stage, we can’t comment further on any individual countries or markets.”

It’s also worth adding that Cardlytics can extend beyond the confines of your online banking. Facebook integration will play a greater role in opening it up to user data, with spending habits AND consumers’ social media activities (e.g. ‘Liking’ Starbucks on Facebook) combined for greater effect.

A white label version of the app is being made available for US banks to personalize and use to invite customers to connect on Facebook. So, in addition to seeing a slew of offers (e.g. 10% off your next Body Shop purchase) in your online statement, these may also be displayed in your Facebook News Feed. And naturally, this also means that anything you interact with on Facebook can be used in future targeted offers.

It’s still early days for the UK and Europe, but it will be interesting to see what reaction it gets once it begins rolling out across the board.